WASHINGTON (Reuters) - A former official with the U.S. governing administration in Iraq and a contractor have been arrested on charges involving a bribery and fraud scheme, the U.S. Justice Department said on Thursday.

The defendants were identified as Robert Stein, comptroller and funding officer for the Coalition Provisional Authority - South Central Region in 2003 and 2004, and Philip Bloom, the owner of numerous construction and service companies.

Beginning in December of 2003, Stein and Bloom conspired to rig bids so that numerous CPA contracts were awarded to Bloom's businesses, according to court documents. The total value of the contracts awarded to Bloom exceeded $13 million.

According to affidavits filed in federal court in Washington in support of the arrest warrants, Bloom paid Stein and others hundreds of thousands of dollars in money and gifts so that contracts would be awarded to Bloom and his companies.

The bribes and gratuities paid to Stein included payments for the purchase of automobiles, jewelry and real estate, according to the court documents.

Stein, 50, of Fayetteville, North Carolina, is in custody there after his arrest earlier in the week, Justice Department officials said. Bloom, a U.S. citizen living in Romania and Iraq, was arrested in Newark, New Jersey, on November 13 and appeared on Wednesday before a magistrate judge in Washington.

The arrests resulted from an eight-month investigation. Stein and Bloom were charged with conspiring to commit money laundering and fraud. If convicted, they both face up to 30 years in prison, the officials said.

The CPA was headed by U.S. diplomat Paul Bremer, and ceased to exist in June 2004, when the United States handed over sovereignty to the Iraqis.

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I hate it when they say, "He gave his life for his country." Nobody gives their life for anything. We steal the lives of these kids. We take it away from them. They don't die for the honor and glory of their country. We kill them."-- Admiral Gene LaRocque